Topeka’s St. Francis Hospital Granted Two-Week Reprieve from Closure; Questions Grow About $250 Million in Charitable Assets Held by Hospital

Topeka — Officials at St. Francis Health Center in Topeka said Tuesday that the hospital’s parent company has agreed not to announce the closure of the facility for at least two weeks while they continue negotiating with potential buyers.

Discussions about the fate of approximately $250 million in charitable assets of the hospital also likely will be discussed during the two-week window.

Dr. Jim Owen, who chairs the hospital’s radiology department and serves on its board of directors, said the hospital’s parent company, Denver-based SCL Health, made a commitment to not announce a closure of the hospital for at least two weeks after numerous meetings in recent days with officials from the city of Topeka, the Greater Topeka Chamber of Commerce and Gov. Sam Brownback’s office, among others.

“My understanding from what I heard this morning is that (CEO Mike Slubowski) is committing to keeping negotiations open for another two weeks, and they’ll consider offers that any people or organizations want to make, but they need to have a commitment from someone in the next two weeks,” Owen said.

Owen said he was aware of “at least one, and possibly two or three” organizations that are still expressing interest in buying the hospital.

However, both Owen and Dr. Randall McAllister, who heads the hospital’s emergency department, said Tuesday that time will run out quickly for St. Francis if it cannot renew essential contracts for cardiology and ER services before June 30.

Both doctors confirmed Tuesday that the contract with an outside cardiology group was set to expire April 30, but has been extended to June 30.

The contract for ER services, which have been provided by the medical staffing firm TeamHealth since 2010, officially expired in September. Members of that team have been working without a contract since then, continuing the terms of the old contract. But McAllister said TeamHealth decided in April that it would not continue that arrangement beyond June 30.

“So far, SCL has been unwilling to negotiate a new contract,” Owen said. “We’re having a hard time understanding what (the issue) is. I can understand them not wanting to get into a long-term contract that they would encumber a buyer with. But at the same time, you’re not just selling a building. You’re selling an enterprise. … To me, you maintain every contract that you’ve got, and you certainly maintain cardiology and ER because those two entities, I’m guessing are 60-plus percent of admissions.”

St. Francis is a 378-bed hospital that was founded in 1909. It employs more than 1,600 people in the Topeka area. It also operates a number of external clinics, including family practice and walk-in “urgent care” operations.

It is one of three major hospitals in Topeka. St. Francis sits just north of Stormont-Vail Hospital, a 586-bed hospital. Topeka is also home to a veterans hospital, the Colmery-O’Neil VA Medical Center.

Brownback and Attorney General Derek Schmidt became directly involved in talks over St. Francis last week when it appeared that closure of the hospital was imminent.

At issue for the state if the hospital closes is what happens to the $248.5 million in charitable assets of the nonprofit hospital — money used to offset the cost of providing uncompensated care to the poor and uninsured — money that state officials say must remain in Kansas under any circumstances, but which hospital officials say may already have been transferred to the parent company in Denver.

That’s the amount of money that was listed last year on St. Francis’ 2015 tax return as “intercompany receivables.”

“St. Francis has benefited from its status as a Kansas charity for many years, and it is important to make certain that such charitable assets are properly managed and remain in Kansas,” Brownback said in a statement Friday, April 14. “The charitable assets should stay here for the benefit of Kansans, to serve their stated mission of improving the health of those who are poor and vulnerable. Northeast Kansas needs the medical services St. Francis provides.”

A spokesman for SCL Health in Denver did not immediately respond to questions about those assets but said the company would issue a statement regarding St. Francis later in the day Tuesday.

Brownback said in a statement Tuesday that he intends to hold SCL Health to its commitment to continue negotiating for someone to buy St. Francis.

“As I have said previously, St. Francis is an important local and regional health care provider, and a significant Kansas charitable asset that has long served its stated mission of improving the health of those who are poor and vulnerable,” Brownback said.